Rent-to-Own Is Never a Good Deal
Posted by Larry Tollen on
Rent-to-own is never a good deal. It’s a lose-lose proposition for a buyer. In the 35 years that I’ve been in real estate, I’ve never met a single person who purchased a property in this fashion and had a positive outcome. While, in theory, it might sound like a reasonable idea for someone who is not yet in the position to buy a home and needs a year or two to build a good credit rating, in reality it simply does not work this way. These deals are usually predatory and designed to take advantage of tenants who have limited options due to their financial situation—and who will agree to unfavorable terms because they don’t know any better. In our experience, there are only two reasons why sellers pursue rent-to-own deals.
The Location is Unattractive
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Chapel Hill based real estate agent Larry Tollen has recently received two noteworthy distinctions for professionalism and customer service. Larry has been selected for the Angie’s List Super Service award for 2014—the second year in a row. Trulia has also recognized him for reaching a performance level that places him in the top 1% of real estate agents in the nation.
If you are buying a home in a Flood plain there are a number of things you should know. Flood insurance rates are currently at some of the highest in history. In 2012, the U.S. Congress passed a law phasing out many of the available subsidies for homes in flood plains and allowing insurance companies to substantially increase rates year over year. In 2014, Congress passed a new version of the law aimed at reducing the previous likelihood of major increases and reinstating some of the subsidies.
Here is what buyers need to know about homeowner’s associations (HOAs). HOAs are common throughout North Carolina and are nearly universal in the Triangle area. The role of a HOA is simple: to protect and preserve property values throughout the neighborhood. You may have heard “horror stories” of people who had bad experiences dealing with their HOA—but throughout my career in real estate, I’ve found these cases to be rare. In fact, homeowners often take for granted how much HOAs help them. Condominiums have associations as well, and while their function tends to be more hands-on, their role is basically the same (see my article on the difference between a townhome and a condo).
Owning a home is still a great way to build wealth. During the Great Recession of the not-too-distant past, home values fell to unprecedented lows. Unfortunately for a lot of people, a large portion (or all) of their net worth was tied up in their homes. As the values fell, their net worth plummeted. Luckily, the real estate market has recovered, and then some. The national housing market has been on the upswing for almost two years and shows no signs of stopping. This significant recovery shows us that home ownership still makes sense as the cornerstone of a wealth-building strategy.
There are thousands of licensed real estate agents in the Triangle, and most of them do a decent job. Some are truly excellent agents and top producers. There are a few you wouldn’t trust to sell a doghouse. Using an experienced agent can reduce or eliminate a lot of the roadblocks involved in buying or selling a home, but only a great agent can make the process seem like a piece of cake (or as close to it as possible!). Here’s how you can separate the wheat from the chaff:
Real estate transactions are often fraught with minefields for both buyers and sellers. Purchasing a home in as-is condition is one of those things that is poorly understood, especially for new or inexperienced buyers. Listing a home in as-is condition may be of benefit to the seller, but it’s going to cost in terms of pricing if a Seller chooses to go this route. Not only are they expressing their unwillingness (or inability) to make repairs, but an as-is sale essentially relieves the seller from both responsibility and liability for the home’s condition.